Raymond James Financial, Inc. (NYSE:RJF) shares fell 6.1% to US$90.42 in the week since its latest first-quarter results. It looks like the results were a bit of a negative overall. While revenues of US$2.0b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.4% to hit US$1.89 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Raymond James Financial's ten analysts is for revenues of US$8.37b in 2020, which would reflect a reasonable 7.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 3.0% to US$7.76. Yet prior to the latest earnings, analysts had been forecasting revenues of US$8.23b and earnings per share (EPS) of US$7.87 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$103, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Raymond James Financial at US$116 per share, while the most bearish prices it at US$93.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect Raymond James Financial's revenue growth will slow down substantially, with revenues next year expected to grow 7.5%, compared to a historical growth rate of 11% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.4% next year. So it's pretty clear that, while Raymond James Financial's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$103, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Raymond James Financial going out to 2022, and you can see them free on our platform here.
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